Missouri AG joins e-book antitrust lawsuit against Apple Inc.

JEFFERSON CITY, Mo. – Americans have paid more than $100 million more than they otherwise would have for e-books, and Missourians are no exception says Attorney General Chris Koster.

This week, Koster joined with 15 other state attorneys general to file suit against Apple Inc. and three of the nation’s largest book publishers for conspiring to fix the prices of electronic books.

Based on a two-year investigation, the lawsuit alleges that Penguin, Simon & Schuster, Macmillan and other publishers conspired with Apple to artificially raise prices by imposing a distribution model in which the publishers set the prices for bestsellers at $12.99 and $14.99 – replacing the former practice of retailers setting the price of e-books through a traditional wholesale distribution model.

To execute the allege price-fixing scheme, the publishers and Apple used contract terms that forced all e-book outlets – not just the iTunes book store – to sell their products at the same price.

Although the Missouri Attorney General’s office didn’t have an estimate on how much this arrangement may have cost Missourians or how much the state may make back through restitution, the lawsuit alleges the scheme has cost customers nationwide an extra $100 million above what they would have otherwise paid.

“These publishing companies conspired to raise the price of e-books,” Koster said. “This conduct was both illegal and fraudulent under Missouri law. When companies compete, consumers benefit from lower prices, and in Missouri we will continue to protect consumers by identifying and stopping this type of anti-competitive behavior.”

The antitrust lawsuit seeks to reverse the effects of the defendants’ anti-competitive conduct as well as damages for customers who paid artificially inflated prices. The lawsuit cites the publishers for violating the states’ antitrust laws and the federal Sherman Antitrust Act.

An agreement in principle has already been reached between the suing states and Harper Collins and Hachette. It has not yet been revealed how much these two publishing companies will have to pay in consumer restitution.